HCA Holdings, Inc. (HCA)

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HCA Holdings, Inc. (HCA)

Q4 2011 Earnings Call

February 6, 2012 10:00 AM ET


Vic Campbell – Senior Vice President

Mark Kimbrough – Chief Investor Relations Officer

Richard Bracken – Chairman and CEO

Milton Johnson – President and CFO

Sam Hazen – President, Operation

Juan Vallarino – Senior Vice President, Strategic Pricing and Analytics

Jon Perlin – President, Clinical and Physician Services Group and Chief Medical Officer


Adam Feinstein – Barclays Capital

Gary Lieberman – Wells Fargo

Justin Lake – UBS

A.J. Rice – Susquehanna Financial

Darren Lehrich – Deutsche Bank

Christine Arnold – Cowen And Company

Frank Morgan – RBC Capital Markets

Sheryl Skolnick – CRT Capital

Gary Taylor – Citigroup

Tom Gallucci – Lazard



Ladies and gentlemen, thank you for standing by. And welcome to the HCA Fourth Quarter and Year End 2011 Earnings Release Call. As a reminder, today’s call is being recorded.

At this time, for opening remarks and introductions, I would like to turn the call over to Senior Vice President, Mr. Vic Campbell. Please go ahead, sir.

Vic Campbell

Lila, thank you and good morning to everyone on today’s call and to those of you who are listening on the webcast. Mark Kimbrough, our Chief Investor Relations Officer and I’m pleased to host you here this morning.

With us, our Chairman and CEO, Richard Bracken; our President and CFO, Milton Johnson; and Sam Hazen, President of Operation. We also have several other members of the HCA senior management team here this morning to assist during the Q&A.

Before I turn the call over to Richard, let me remind everyone that should today’s call contain any forward-looking statements, they’re based on management’s current expectations. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those that might be expressed today, many of the factors are listed in today’s press release and in our various SEC filings.

Many of the factors that will determine the company’s future results are beyond the ability of the company to control or predict. In light of the significant uncertainties inherent in any forward-looking statements, you should not place undue reliance on these statements. The company undertakes no obligation to revise or update any forward-looking statements whether as a result of new information or future events. And as you heard the call is being recorded, a replay will be available later today.

With that, let me turn the call over to Richard Bracken.

Richard Bracken

Okay. Thank you, Vic, and good morning to all. We do appreciate your participation on our call this morning. We have a lot to cover today so let me get to it. I’ll start by providing some overall observations for the year, and then Milton and Sam will follow with detailed review of the fourth quarter’s financial and operating results. Milton will then close this morning with our 2012 guidance and some of the key assumptions in that guidance.

Let me begin by saying that we are generally pleased with how our operating teams navigated through some pretty significant challenges the hospital industry faced in 2011. We ended the year not expecting to see significant improvement in unemployment rates and other key economic indicators, and also knowing that hospitals would not receive a Medicare payment rate increase for at least three quarters of the year.

In addition, we expect that the Medicaid payment pressures in certain states but as you now know we ended up with a greater than anticipated Medicaid rate cuts in both Florida and Texas in the second half of the year and as we have discussed at length in our call beginning with the second quarter of 2011, we have experienced a service mix shift from surgical to medical admissions.

Despite these significant challenges we produce revenue growth of nearly 6% and adjusted EBITDA growth of 3.3%. During 2011 we made significant investments in technology and our clinical quality and patient service agendas, and our market based service line strategies, and we’re confident these investments will continue to serve us very well in the future.

We’re particularly pleased with the successful efforts of our operating teams to adjust their offering operating cost in the second half of the year to offset the greater than anticipated revenue per admission pressures.

In our third quarter, our same facility operating expense per equivalent admission was flat and in the fourth quarter we actually saw four-tenth percent decline in our same facility operating expense per equivalent admissions.

For the full year, our operating expense per equivalent admission rose only 1.4% reflecting strong management of both overhead and variable expenses, while still supporting important growth initiatives. As we’ve discussed before part of our ability to manage operating costs effectively as result of our continued strong volume growth. This proved true throughout each quarter of 2011.

For the full year, our admissions grew 4.2% equivalent admissions were up 5.2% and emergency room visits were up 7.7%. On a same facility basis admissions grew 2.3% equivalent admissions 3% and ER visits up 6.2%.

We now have experienced 17 straight quarters of same facility equivalent admission growth, and Milton and Sam will provide some more color on our volume growth in a few minutes, but let me just say that we believe this growth not only confirms our favorable facility locations in areas with good population growth dynamics but also reflects an operating agenda that seeks greater efficiency and effectiveness in how we process patients through our hospital, equally important in this strategy is our commitment to improve clinical outcomes and enhance the overall patient experience.

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